Smartphone Quarterly Sales Drop for the First Time

According to market researcher Gartner on March 12, the number of smartphones sold worldwide sank 5.6 percent year on year to 408 million in the fourth quarter of last year. This is the first time that quarterly smartphone sales declined compared to the previous year. "People who buy new smartphones are choosing premium models and the high performance of the premium models has made it take more time for them to replace their smartphones with new ones," said a director at Gartner.

A red flag was raised for Samsung Electronics and LG Electronics, which recently released new products, as global smartphone sales volume declined. Samsung Electronics' Galaxy S9 series began to be delivered to those who pre-ordered the new smartphone model on March 9. But it was reported that Galaxy 9 sales hit only about 70 percent of sales of the previous version. Apple, which released the iPhone X in honor of the 10th anniversary of the iPhone in the second half of last year, is also reported to have underperformed.

Indeed, according to recent market research by Bay Street Research, the average smartphone replacement period increased from 23 months in 2014 to 31 months now. It is expected to climb to 33 months next year.

Samsung Electronics, for example, launches new premium smartphones every six months, but consumers are using their existing products for nearly two and a half years, and sales have been declining as such periods have extended. In recent years, the performance of an application processor (AP), which acts as the central processing unit (CPU) of a computer in a smartphone, has improved. So has battery performance. In general, when a smartphone is used for a long time, its battery performance deteriorates, giving rise to replacement demand. But batteries are improving, lasting longer, too.

"In the smartphone industry, makers can survive competition with other companies by enhancing product performance, but it is ironic that such enhancement makes the replacement cycle of smartphones longer," an industry expert said. “Therefore, they are looking for ways to attract competitors' customers via various replacement programs among others."